Insurance Contribution to Economic Growth in Countries of the West African Economic Monetary Union (WAEMU): A Dynamic Panel Data Approach

Jean-Claude Sourou Keke and Wilfried Pkêdonou Houedokou

Economist, Centre for Development Policy Analysis (CDPA)

Research Assistant, Centre for Development Policy Analysis (CDPA)

*Corresponding Author’s E-mail :houedok@yahoo.fr;

whouedokou@capod.org; Tel: (00229) 96741395/ 94311865

Accepted 03 May, 2013

Abstract

This communication is intended to analyze the contribution of insurance to economic growth in WAEMU countries using panel data over the period 1999-2009. Indeed, few studies have investigated the contribution of this sector to economic growth in the WAEMU. The LSDVC’s method proposed by Bruno (2005), adopted in this study is better than the Generalized Method of Moments (GMM) for estimating dynamic panels when the sample size is small. It appears that the stimulation of insurance including life ensures a level of growth in the WAEMU. In addition, comparative analysis with the Economic Community and Monetary of Central Africa (ECMCA) shows that life insurance has a positive and  insignificant in WAEMU and ECMCA, while non-life insurance has the opposite effect in both areas. With this result, some actions be undertaken to improve this sector's contribution to economic growth in the WAEMU. Thus, the study suggests: i) draw lessons from the best South African experience to offer new products tailored to the needs of populations in terms of guarantees, distribution or ease of access and price tailored ii) develop strategies to increase market shares of countries in the WAEMU countries, with action for the progressive conquest of part of the population that has not yet subscribed to insurance other than the service "car insurance” and iii) help the actors to work towards the promotion of life insurance guarantee for the future development of the insurance on the one hand and the outbreak of insurance companies in the agricultural sector because this sector contributes much Economic growth in EU countries.

Keywords: Growth, dynamic panels, Insurance, market, financial intermediation.